What would happen if it happened and no one did the math?
We might be at peak oil.
Yes for a few years an extra few barrels can be squeezed out.
Yes this can go on for several decades.
But there is something in the flow of news reports where we are at peak oil and getting to peak demand. Or fools in the west if we do not create a peak demand. Meaning future declines in usage.
We might be at peak oil.
Again?
More seriously, are you referring to peak supply or peak demand?
DB2
More seriously, are you referring to peak supply or peak demand?
DB2
I thought was clear, we can squeeze more oil in a given year. We can plateau for a while here. Both supply and demand are maxed out in real terms. While we have heard major oil companies say it is no longer a growth industry, putting the pandemic supply issues aside, this now is the definition of peak oil. It never was an all or nothing and the pipes shut off.
It is a slow fading away.
BTW with economies of scale and no environmental clean up fossil fuels look cheap. But alternatives without the economies of scale that are a good bit less messy are competing now. Given economies of scale alternatives will be a far better deal.
Well, time for my usual spiel. I’ll say it a bit differently than usual.
If you don’t realize that we are at or slightly past (the current high water mark is late 2018) maximum oil production, then you will be at a serious investing disadvantage moving forward. Sure, flooding the markets with extra cash makes it easy for those with assets to make money and get ahead, but everyone else is falling behind. There is no doubt in my mind that the primary cause of geopolitical strife is that unhappiness in not having what you want or need, an inability to satisfy the demand for inexpensive energy and refined raw materials.
Here is the EIA summary of oil production for the past 4 years:
https://www.eia.gov/international/data/world/petroleum-and-o…
Take a look at who produces the oil. How many of those countries will be interested in selling us oil if there is a bifurcation in the world economy? WendyBG made one of her great posts of the past few years by announcing the alliance between Russia and China. Consider the possibility that half of the world with three quarters of the oil may decide they don’t need America offering its might and opinion about everything.
This is all a very big deal in my opinion.
"Take a look at who produces the oil. How many of those countries will be interested in selling us oil if there is a bifurcation in the world economy? WendyBG made one of her great posts of the past few years by announcing the alliance between Russia and China. Consider the possibility that half of the world with three quarters of the oil may decide they don’t need America offering its might and opinion about everything.
This is all a very big deal in my opinion."
Many countries produce oil including the US, Canada, Venezuela, Mexico, just about all the Arab Countries.
The most easiest to access oil is in the Mid-East - Saudi, Iraq, Iran. Hard to produce oil (oil sands) in Canada and Venezuela and 'off shore. Nigeria is always a problem with instability.
Of course, all oil fields deplete. They produce less and less, so you need to keep drilling and finding new fields just to keep up with current production. Fracked wells are worst of all. Gas wells can deplete 80% in 2 or 3 years. So you keep drilling thousands of new wells to replace the production lost on the thousands of existing wells.
Natural gas? Who has it? US, Russia, Mid-East countries again.
Who needs oil and gas? Europe, China, Asia, Japan, and hundreds of other countries.
Will EVs solve the problem. Nope. Transport is 20% of total oil/gas use. World population is increasing, and billions want to move up the economic ladder with car purchases, more gadgets, refrigerators, TVs, etc.
Right now - fertilizer shortage (made from NG). Prices for food will climb through roof shortly. Crops without enough fertilizer will be 50% of normal. Planting season in Ukraine passed - and they are major major exporter of grain.
It’s going to get interesting.
Oil companies have little incentive to drill drill drill. Can’t get financing, government agencies on their back, green advocates on their back, so they won’t do anything but internally financed things. They are slowly returning equity to stockholders and will continue to do so.
Stock buy backs, consolidation. With oil prices rising, they are in great shape.
Keep in mind energy has had big effects on history. Before WW1, Italy got lots of coal from England. England coal mines gave out and it couldn’t export enough. Didn’t take long for Italy to get in bed with Germany which could supply all the coal they needed. Heck, navy ships ran on coal back then. So did entire economies. Twice Italy aligned with Germany - WW1 and WW2.
so did ocean liners.
The Titanic had problems getting coal for the maiden voyage. Not enough coal from UK mines. Would up with low grade coal that caused bunker fires that weakened steel on the side plates. Probably contributed to faster sinking rate as those plates buckled faster.
Japan went hunting for ‘resources’ when we cut off US oil supplies to Japan. wound up taking over oil fields by Borneo. That lead to WW2.
Nearly all the wars in history have been fought over ‘resources’ from oil, water rights, fishing rights, ‘labor’, buffalo herds, and hunting grounds, GOLD, etc.
In WW2, twice Hitler went after the oil fields as his own resources dwindled. Took over Romania and the Ploesti oil field. Drove into Russia then diverted to the rich oil fields to the south. Got bogged down - and his switching priorities gave the Russians enough time to gather the resources to fight him all the way back to Berlin. Didn’t help him that we continually bombed his coal to liquid fuel plants once we could. Hitler lost the war because of lack of fuel. No fuel for tanks. No fuel for planes, or training pilots.
Japan was getting to the same point. We cut off their supplies. We bombed their refineries. There wasn’t much left.
will anyone step in to fill Russian shoes meanwhile? (likely half their exports affected - 5% of world supply). Nope. Not going to happen. Maybe a trickle more. High prices will cut consumption a bit.
t.
Many countries produce oil including the US, Canada, Venezuela, Mexico, just about all the Arab Countries.
ABC: Argentina, Brazil, Colombia, Trinidad & Tobago, Nigeria, UK, Norway…
The Captain